• 4 minutes Ten Years of Plunging Solar Prices
  • 7 minutes Hydrogen Capable Natural Gas Turbines
  • 10 minutes World looks on in horror as Trump flails over pandemic despite claims US leads way
  • 13 minutes Large gas belt discovered in China
  • 5 mins COVID 19 May Be Less Deadly Than Flu Study Finds
  • 48 mins Would bashing China solve all the problems of the United States
  • 5 hours 60 mph electric mopeds
  • 2 hours Chicago Threatens To Condemn - Possibly Demolish - Churches Defying Lockdown
  • 1 hour Yale University Epidemiologist Publishes Paper on Major Benefits of Hydroxchloroquine for High-risk Outpatients. Quacksalvers like Fauci should put lives ahead of Politics
  • 6 hours China to Impose Dictatorship on Hong Kong
  • 59 mins Let’s Try This....
  • 1 hour HVDC Cheaper Than Low-carbon Natural Gas
  • 6 hours Nothing can shake AMLO’s fossil-fuel fixation
  • 11 hours Pompeo's Hong Kong
  • 1 hour Oil and Gas After COVID-19
  • 6 hours Iran's first oil tanker has arrived near Venezuela
  • 7 hours Natural gas is crushing wind and solar power
  • 7 hours New Aussie "big batteries"

Saudi Arabia To Take On Billions In Debt To Survive The Oil Price Crisis

Saudi Arabia may have to borrow as much as $58 billion this year to cover a budget shortfall caused by the oil price slump, Bloomberg reports, citing Finance Minister Mohammed al-Jadaan.

Al-Jadaan told media this week that the Kingdom might issue bonds worth $26.57 billion (100 billion riyals) this year in addition to an earlier issue of $31.88 billion (120 billion riyals) worth of debt.

Saudi Aramco, for its part, is considering a $10 billion sale in part of its pipeline business, Bloomberg reported on Thursday.

“The kingdom went through similar crises in its history – maybe even worse – and was able to pass through them,” Al-Jadaan said. “This is not an exception.”

Most observers note that this price crisis is like no other in history. The unique combination of excess supply and a 30 percent drop in demand weighs heavily on oil-dependent economies throughout the world, and even low-cost Saudi Arabia is not exempt. 

The oil market is indeed flooded. The Wall Street Journal reported earlier this week, citing Saudi oil officials, that at least one in every ten VLCCs, each capable of carrying 2 million barrels of oil, is used for floating storage with many holding Saudi crude. Some of that, the sources said, had yet to find buyers.

Saudi Arabia is bracing for the inevitable blow. In March, the government asked state agencies to cut their budgets by at least 20 percent, Reuters reported, citing sources in the know who declined to be named. That was before OPEC+ agreed to implement cuts of 9.7 million bpd in hopes this would help prices. It didn’t.

Now, according to an analyst with an Egypt-based investment bank, the Saudi deficit could widen to 15 percent of GDP, Bloomberg notes. That would be less than the 17 percent recorded for 2016, but it would still be quite brutal for the Kingdom that had to roll back austerity measures it implemented during the 2014-2016 crisis pretty quickly as bureaucrats rebelled.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment
  • david Smith on April 24 2020 said:
    Saudi Arabia has the fith largest foreign currency reserves. Won't they tap into that first?


    $501.8 Billion

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News